Collaborating with your bookkeeper for faster tax prep


We have all, at one point, received the set of books that we are supposed to use to prepare a tax return, only to feel our anxiety rise knowing the number of issues we immediately see. Equity will not tie to the prior year return, all the sudden they have no fixed assets where there were some last year, the accounts receivable balance is negative and there is a new loan to shareholders you know nothing about.

Expecting to be able to pick up a return and prepare it efficiently during tax season is really critical in order to not just get through our workload, but also save our sanity.

That being said, tax professionals do not do enough to clearly communicate to our bookkeeping partners what we need. Bookkeepers are your first line of defense in terms of getting necessary information from your tax client in an organized and sensible fashion.

Here are three things you can implement immediately to help alleviate unwelcome surprises and frustrating back and forth communication:

1. Help them with a tax close

There are of course some amazing bookkeepers who also have tax knowledge, but many are relying on the tax professionals to translate the books to “tax language”. That means that their goal in closing the books is exactly that, finishing reconciliations and closing. They won’t necessarily know what their monthly depreciation entry should be unless you provide it to them.

You can help make your life a lot easier by providing some guidance to the bookkeepers you work with. Tell them what you look for on the financial statements right away and consider providing them with that checklist.

You do not want to see any negative balances, you will look to make sure items like accumulated depreciation and equity roll forward, and any new fixed assets or loan balances you will likely need underlying information. If they know what to look for first, you will get cleaner books and less surprises come tax time.

2. Consider providing workpaper templates

After years of preparing tax returns, I have worked with some phenomenal bookkeepers as well as some that I could name a few forehead wrinkles after. But across the board I see issues with items like equity roll forward. Especially, if you as the tax preparer made an adjustment for the prior year return and never gave entries back to the bookkeeper.

Bookkeepers are your first line of defense in terms of getting necessary information from your tax client in an organized and sensible fashion.

Creating equity roll forward workpaper templates and then providing them to your bookkeeping partners to prepare before they send the financials can help to eliminate a lot of potential issues before you spend hours preparing a return only to realize it does not balance (and never will).

If you want to see shareholder wages already separated and state taxes already broken out, why not create a profit and loss template so the bookkeeper has the presentation already prepared for you?

3. Ask them for a pre-prep call

The bookkeeper is your keys to the kingdom. They know your client intimately, including his favorite coffee shop after recording the transaction for his lattes for the last year. Before you start working on the return, ask the bookkeeper to set up a call to go over any changes with you.

The new car they bought on Dec. 30 will likely come up before you prepare the whole return only to find out the client wants to know why the deduction is not there. Getting the lay of the land from the bookkeeper is one of the best kept secrets to help to keep you efficient and know what to expect when you get into the return.

I have saved countless hours of tax prep frustration by taking the time to ensure the numbers I am working with are good first, and that I have an understanding of what to expect. If you want to impress your clients with how seamless your service is, build your relationship with their bookkeeper.

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